Taltavull, P. (2011), "Guest editorial", International Journal of Housing Markets and Analysis, Vol. 4 No. 4. https://doi.org/10.1108/ijhma.2011.35104daa.001
Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
Article Type: Guest editorial From: International Journal of Housing Markets and Analysis, Volume 4, Issue 4
Housing affordability is a growing issue after the impact of the credit crunch in most developed economies. Traditionally, affordability has been analysed using two rules (i.e. the ratio-rule and the minimum income rule) in most cases combined with general variables affecting the total housing expenditure made by each household. From this view, lack of affordability was linked to income levels at which any household could afford to rent or own a home. The credit crunch has introduced a new perspective to this debate as it has increased the affordability problems and has created a discussion about how to measure affordability under these new circumstances. Nowadays, there is not only the income aspect which is conditioning affordability. Financial flow restrictions have damaged the previous accepted tools designed to improve affordability. A lower level affordability for existing homeowners and subsequent mortgage defaults are creating increasing social problems, predominantly in young households with children, with a dramatic increase in the risk of reaching poverty levels. The relevance of policy measures designed to avoid the adverse effects of this process is now a central issue following the credit crunch. These new challenges with housing affordability are producing a renewed focus on the concept, its role and the best way for an analysis. In fact, there is no agreement about how to define housing affordability in different parts of the world or how the socioeconomic conditions could affect the interpretation of the common measures to calculate the level of affordability in a housing market.
This issue is focused on the topic of housing affordability. We have asked to researchers to investigate how affordability could be better measured using new methodologies, their experience and the new challenges relating to this topic raising after the crisis. The answers are in this special issue and also will be covered in a second special issue covering different aspects of affordability being researched.
In this issue, there are six papers. Most of the papers are focused on the affordability and home ownership while others examine affordability and renting. Christine Whitehead and Sarah Monk argue that partial ownership products could play an important role after the crisis, improving affordability and reducing risks to individual households during the early years of owner-occupation. Partial ownership products could be one solution to adopt until the market improves and reaches equilibrium.
Colin Jones, Craig Watkins and David Watkins highlight the differences in affordability when a spatial base is taken into account. Their paper highlights the difficulties when estimating affordability measures at a housing market level due to a double complexity:
the uniform definition of the spatial HMAs to take into account as a reference; and
the differences in house price structure in local areas giving differences in affordability measures are more consistent using a spatial definition.
However, this paper demonstrates that detailed information at HMAs level, including mortgage finance, gives more robust affordability indicators and is better prepared to serve as a tool for policy implementation.
Kenneth Gibb investigates the different measures applied in Scotland within the housing policy to maintain the supply of new affordable housing amid the impact of the credit crunch. Focusing on social rental housing, intermediate housing market for rent and low-cost home ownership, the paper examines the measures applied by the government using a combination of tools to improve the flow of finance towards the social house market sector. This paper discusses the relevance of the analysis at local level, and defends the change towards a new system with relevant variations in the role of current players as housing associations.
Luisa Ingaramo and Stefania Sabatino review the affordability concept in the recently approved Italian housing policy. Under such regulation, new financial figures have been created to guarantee flow of funding to the social housing market. The paper analyses how two of these policies, namely local ethical real estate funds and the previously existing banking foundations, could increase affordability and also how their intervention could match the social housing demand at metropolitan level for 12 areas in Italy. Complexity in new institutions and the requirement to monitor the effects of the policy in the medium and long term, are some important conclusions in this paper.
The paper from Michael McCord, Stanley McGreal, Jim Berry, Martin Haran and Peadar Davis examines on the implications from a lack on mortgage finance, resulting directly from the credit crunch crisis and bank nationalisations, on housing market affordability. The paper estimates different affordability measures for the housing market in Northern Ireland using a large comprehensive dataset. Conclusions explain that affordability measures have changed after the crisis, as well as the relevance of the type of affordability definition to be used, as each affordability measure quantifies different aspects of a cyclical housing market.
The final paper by Anna Clarke and Sarah Monk discusses residualisation of the social rented sector approaches and the relevance of social rent to cover housing needs of about 18 percent of households in the UK. The paper argues the loss on this market weight and the social consequences this process could have in the short-term increasing poverty.
These six papers present new insights into the direction that research into housing affordability has to follow. To know more about these aspects and to support more robust indicators is the compelling direction for designing effective housing policy tools that allow housing markets to avoid the negative impact from a lack of affordability resulting from the credit crunch. I want to thank all authors for sending their papers to this special issue as well as to referees giving their knowledge to contribute to the discussion and the quality, their strong support of this journal. Thanks to all of them.
Paloma TaltavullGuest Editor